SILVER SPRING, Md. (AP) – Consumer confidence in the US is declining for the second month in a row as Americans look to their …
SILVER SPRING, Md. (AP) –
Consumer confidence in the U.S. is declining for the second month in a row as Americans ’perceptions of their current and future prospects fade in the midst of steady inflation.
On Tuesday, the Conference Council said its consumer confidence index fell to 106.4 in May – still a strong figure – from 108.6 in April.
The index of the current position of the business research group, which measures consumers’ assessment of current business and working conditions, also fell in May to 149.6 from 152.9 in April.
The index of expectations, based on six-month forecasts of consumers regarding income, business and labor market conditions, also fell in May to 77.5 from 79 in April. In February, he was above 80 and remains a weak spot in the poll.
President Joe Biden will meet with Federal Reserve Chairman Jerome Powell on Tuesday as sharp inflation continues to cut Americans ’incomes.
Tuesday’s meeting will be the first after Biden reappointed Powell as head of the central bank and a few weeks after the Senate confirmed a second term. The White House said the couple would discuss the state of the U.S. and world economies and particularly high inflation over four decades, which Biden called a “top economic priority.”
The Federal Reserve raised the basic borrowing rate by half a point in early May, which is the main mechanism for fighting inflation. This year is expected to increase the rate many times with the possibility of a half increase.
Inflation has soared over the past year at the fastest pace in more than 40 years, with rising spending on virtually everything that nullifies Americans ’wage increases.
Earlier in May, the Labor Ministry said consumer prices jumped 8.3% last month from last year. This was below 8.5% compared to the same period last year in March, which was the highest figure since 1981. Monthly prices rose 0.3% from March to April, the lowest increase in eight months.
U.S. producer prices rose 11% in April from a year earlier, a significant increase, indicating high inflation that will remain a burden for consumers and businesses in the coming months.
Consumers were again slightly less optimistic about the job market, even though employers in the U.S. added at least 400,000 jobs for 12 months in a row, reducing unemployment to 3.6%. This is the lowest level since the pandemic erupted two years ago and just above the half-century low of 3.5% that was reached two years ago.
The intention to buy valuable goods – cars, houses and large appliances – has cooled down a bit, the Conference Council said. Rising costs remain a major concern for consumers, as their inflation expectations have largely unchanged from higher April levels.
“Looking ahead, we expect rising prices and further interest rate hikes to create ongoing side risks to consumer spending this year,” said Lynn Franco, senior director of economic performance at the Conference Board.
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